Emirates, the world's largest long-haul airline, narrowed its loss in the first-half of its fiscal year, amid a rebound in travel demand and stronger performance from its freight business.
First-half losses narrowed to $1.6 billion in the period from April to September, compared with a $3.4bn loss in the same period last year, the airline said in a statement on Wednesday.
Revenue rose 86 per cent to $5.9bn, with the airline carrying 6.1 million passengers, up from 1.5 million in the same period last year. The volume of cargo lifted rose 39 per cent to 1.1 million tonnes, bringing the business segment back to 90 per cent of pre-coronavirus (2019) levels by volume handled.
“As we began our 2021-2022 financial year, Covid-19 vaccination programmes were being rolled out at unprecedented scale around the world. Across the group, we saw operations and demand pick up as countries started to ease travel restrictions. This momentum accelerated over the summer and continues to grow steadily into the winter season and beyond," said Sheikh Ahmed bin Saeed, chairman and chief executive of Emirates airline and group.
“Our cargo transport and handling businesses continued to perform strongly, providing the bedrock upon which we were able to quickly reinstate passenger services. While there is still some way to go before we restore our operations to pre-pandemic levels and return to profitability, we are well on the recovery path, with healthy revenue and a solid cash balance at the end of our first half of 2021-2022."
As travel demand picked up, Emirates was operating passenger and cargo services to 139 airports as of the end of September, using its entire Boeing 777 fleet and 37 Airbus A380s.
Overall capacity during the first six months of the year increased 66 per cent to 16.3 billion available tonne kilometres as countries eased travel and flight restrictions.
Capacity measured in available seat kilometres, more than tripled at 250 per cent. Passenger traffic carried, which is measured in revenue passenger kilometres, was up 335 per cent while the average passenger seat factor recovered to 47.9 per cent, compared with last year’s pandemic figure of 38.6 per cent.
The Emirates group narrowed its net loss to $1.6bn in the April to September period, compared with a $3.8bn loss in the same period last year.
Group revenue increased 81 per cent to $6.7bn from $3.7bn during the same period last year. The group's cash position remained steady at $5.1bn as of September 30, 2021, compared to $5.4bn at the end of March 2021.
Emirates received additional state support during the fiscal period, with a further injection of $681m by way of an equity investment.
“Our ability to pivot and pull through the toughest period in our history to date, can be attributed to Emirates’ and dnata’s strong brands, high-quality products and services, digital and innovation capabilities, and our amazing people," Sheikh Ahmed said.
"We intend to continue investing in these core areas to take our business into the future, together with the leaner processes and new technology capabilities that we have implemented in the past months.”
Demand at dnata's businesses in cargo and ground handling, catering and retail, and travel services rebounded as travel restrictions were eased.
Dnata posted a $23m profit, compared with a $396m loss last year. Its revenue increased 55 per cent to $1bn from the same period last year.
THE BIO
Born: Mukalla, Yemen, 1979
Education: UAE University, Al Ain
Family: Married with two daughters: Asayel, 7, and Sara, 6
Favourite piece of music: Horse Dance by Naseer Shamma
Favourite book: Science and geology
Favourite place to travel to: Washington DC
Best advice you’ve ever been given: If you have a dream, you have to believe it, then you will see it.
Who's who in Yemen conflict
Houthis: Iran-backed rebels who occupy Sanaa and run unrecognised government
Yemeni government: Exiled government in Aden led by eight-member Presidential Leadership Council
Southern Transitional Council: Faction in Yemeni government that seeks autonomy for the south
Habrish 'rebels': Tribal-backed forces feuding with STC over control of oil in government territory
Mercer, the investment consulting arm of US services company Marsh & McLennan, expects its wealth division to at least double its assets under management (AUM) in the Middle East as wealth in the region continues to grow despite economic headwinds, a company official said.
Mercer Wealth, which globally has $160 billion in AUM, plans to boost its AUM in the region to $2-$3bn in the next 2-3 years from the present $1bn, said Yasir AbuShaban, a Dubai-based principal with Mercer Wealth.
“Within the next two to three years, we are looking at reaching $2 to $3 billion as a conservative estimate and we do see an opportunity to do so,” said Mr AbuShaban.
Mercer does not directly make investments, but allocates clients’ money they have discretion to, to professional asset managers. They also provide advice to clients.
“We have buying power. We can negotiate on their (client’s) behalf with asset managers to provide them lower fees than they otherwise would have to get on their own,” he added.
Mercer Wealth’s clients include sovereign wealth funds, family offices, and insurance companies among others.
From its office in Dubai, Mercer also looks after Africa, India and Turkey, where they also see opportunity for growth.
Wealth creation in Middle East and Africa (MEA) grew 8.5 per cent to $8.1 trillion last year from $7.5tn in 2015, higher than last year’s global average of 6 per cent and the second-highest growth in a region after Asia-Pacific which grew 9.9 per cent, according to consultancy Boston Consulting Group (BCG). In the region, where wealth grew just 1.9 per cent in 2015 compared with 2014, a pickup in oil prices has helped in wealth generation.
BCG is forecasting MEA wealth will rise to $12tn by 2021, growing at an annual average of 8 per cent.
Drivers of wealth generation in the region will be split evenly between new wealth creation and growth of performance of existing assets, according to BCG.
Another general trend in the region is clients’ looking for a comprehensive approach to investing, according to Mr AbuShaban.
“Institutional investors or some of the families are seeing a slowdown in the available capital they have to invest and in that sense they are looking at optimizing the way they manage their portfolios and making sure they are not investing haphazardly and different parts of their investment are working together,” said Mr AbuShaban.
Some clients also have a higher appetite for risk, given the low interest-rate environment that does not provide enough yield for some institutional investors. These clients are keen to invest in illiquid assets, such as private equity and infrastructure.
“What we have seen is a desire for higher returns in what has been a low-return environment specifically in various fixed income or bonds,” he said.
“In this environment, we have seen a de facto increase in the risk that clients are taking in things like illiquid investments, private equity investments, infrastructure and private debt, those kind of investments were higher illiquidity results in incrementally higher returns.”
The Abu Dhabi Investment Authority, one of the largest sovereign wealth funds, said in its 2016 report that has gradually increased its exposure in direct private equity and private credit transactions, mainly in Asian markets and especially in China and India. The authority’s private equity department focused on structured equities owing to “their defensive characteristics.”
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